Trump Accounts for foster children: What to know

Advocates say Trump Accounts could give children in the foster care system a more secure financial foundation in adulthood, but there are still some important details to work out.

under one attempt Under the legislation, announced by First Lady Melania Trump along with the Treasury Department in early June, states would be able to open Trump Accounts in the names of eligible foster children. So far, 25 governors have pledged to do so, according to a new count provided by the Department of Health and Human Services.

The goal is to help this vulnerable population reach adulthood with a financial safety net. Experts say many children who leave the foster care system are deficient in this regard. But there are some sticking points, including limitations on access to money held in the Trump Account if necessary and whether these assets would affect these individuals’ eligibility for services for which they would be eligible as adults.

“Overall, I think there may be benefits [these] “But there is also a need for more flexibility so that foster youth can access funds at the critical time when they exit care,” said Daniel Hatcher, a law professor at the University of Baltimore School of Law and an expert on child welfare funding.

Trump Accounts – Tax-advantaged, available on July 4th investment accounts for children – allow parents, guardians, grandparents and others to contribute up to $5,000 annually in after-tax dollars until the year before the beneficiary turns 18. Babies born between 2025 and 2028 who have an account will receive an initial deposit of $1,000 from the Treasury Department.

There were an estimated 331,747 children in foster care in 2025. data From HHS.

Roughly aged 15,000 HHS data shows foster care expansion in 2025. In most states, children become legal adults at age 18. For foster children, states often offer some form of extended foster care (usually through age 21) to eligible young adults who choose to remain in the program.

While services are available to help former foster children transition to adulthood (including rental assistance, workforce training vouchers), supporters say Trump Accounts could be another tool that can help. But whether they will ultimately deliver the predicted benefits is an open question, advocates say.

“We are delighted that the emphasis on foster children is drawing attention to the long-term needs of children and youth in foster care,” said Arnie Eby, executive director of the National Foster Parent Association.

But “we’re not 100% sure if there are any benefits.” [of Trump Accounts] “They will work as intended or hoped,” Eby said.

Trump Account assets generally cannot be accessed before age 18. One problem for adopted children is that although the account becomes their property at that age, the money may not be easily accessible without a cost.

This is because traditional rules apply. Individual retirement accounts will be valid. Regular income tax rates apply to withdrawals unless the money is already taxed at the time it is deposited, and a 10% early withdrawal penalty may apply to money withdrawn before age 59½ unless an exception is met.

Already, Trump Accounts have been given charitable commitments, including $6.25 billion from founder Michael Dell. Dell Technologiesand his wife, Susan. In that case, children born between 2016 and 2024 would each be able to receive $250 if they live in a zip code where the median income is $150,000 or less.

There are also approximately 27,000 foster children receiving Social Security and/or Supplemental Security Income benefits, according to the Social Security Administration. For example, Social Security survivor benefits may kick in due to the death of a parent, while SSI may apply for individuals with disabilities if they meet income guidelines for eligibility.

But many state child welfare agencies are now interfering with those federal benefits to cover their own expenses, experts say. As of last year, only 11 states had policies in place to protect survivor benefits for foster children. In mid-December, the Administration for Children and Families, an agency within HHS, announced He said he had informed the remaining 39 state governors to stop diverting that aid.

Since then, the number of states that have agreed not to interfere with survivor benefits has increased to 28, according to information provided by HHS, and only a few do not accept SSI. But it’s unclear whether other states will change their practices or use Trump Accounts as a place for assets.

Currently, states are allowed to hold benefits in the foster child’s name through a checking or savings account. They may also open Achieving a Better Life Experience, or ABLE, accounts for foster children receiving SSI due to disability, if offered, which is specifically for individuals with disabilities. Up to $100,000 can be in the account without affecting SSI eligibility.

If states direct federal aid for children to Trump Accounts, they may not deposit the full amount.

Average monthly survivor benefit for a person under 18 about $1,181According to the Social Security Administration. In terms of SSI, the average benefit among children under 18 is about $874 per month.

If survivor benefits are deposited into a Trump Account, they will count toward that $5,000 limit, according to the Treasury Department; This means that any extra benefits must be kept in a separate account for the child. No guidance has yet been issued regarding SSI and how it will be handled in the Trump Account.

Additionally, although the Trump Account will not be taken into account when determining SSI eligibility before the child turns 18, according to the Social Security Administration, it is unclear how these assets will be counted for any income-based benefits once the child reaches adulthood.

“If a Trump Account prevents them from continuing to receive resources [age] 18 or 21, whatever their state’s threshold is, that’s an unintended outcome that makes their situation worse,” Eby said.

But advocates generally welcome the focus on improving long-term outcomes for children in foster care, he said.

“We want to make sure that these funds change the trajectory of someone who has experienced the child welfare system, as they were intended,” Eby said.